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1 WASHINGTON QUALIFIED HEALTH PLAN SELECTION: CONSIDERATIONS FOR CONSUMERS December 2013 Support for this resource provided through a grant from the Robert Wood Johnson Foundation s State Health Reform Assistance Network program.

4 Plan Value: Metal Levels Premiums paid by consumer Platinum: Expected to cover 90% of the cost of benefits on average (90% AV) Gold: Expected to cover 80% of the cost of benefits on average (80% AV) Silver: Expected to cover 70% of the cost of benefits on average (70% AV) Bronze: Expected to cover 60% of the cost of benefits on average (60% AV) Share of costs covered by insurance company What is actuarial value? The percentage of an enrollee s medical costs that a plan will cover, on average, after payment of the premium and plan enrollment. The balance will be covered by the enrollee through co-pays and deductibles. 4

5 Plan Value: Catastrophic Plans Individuals under 30 or individuals who cannot afford coverage because the cost of premiums exceeds 8% of their income are eligible to purchase catastrophic coverage. Catastrophic plans have very high deductibles, but after the deductible is met provide full coverage with no. Generally lower premiums than other plans. Offer only preventive coverage (with no ) until a deductible is met. After deductible met, covers all other essential health benefit expenses with no. Premium tax credits are not available (regardless of income). 5

6 Financial Considerations Premiums The monthly payment to enroll in health insurance. Premiums for QHPs may vary depending on the plan, geography, age, smoking status, and family size. The amount a consumer will contribute to premiums depends on premium tax credits individuals with family income less than 400% of the Federal Poverty level may qualify for tax credits that will reduce their required contribution to the cost of premiums. Cost Sharing Amounts an enrollee pays for health services, after payment of premiums Co-payments: The amount an enrollee pays for an individual service; for example, when they visit the doctor. Deductibles: The amount an enrollee pays, after payment of premiums, before insurance coverage applies. There are maximum limits on in QHPs. Cost sharing does not apply to all services certain preventative services must be provided without co-payments and regardless of if the deductible has been met. 6

7 Financial Assistance Premium Tax Credits A federal tax credit that subsidizes the cost of purchasing a QHP Eligibility: Available for individuals % FPL who file for taxes and who can not afford other minimum essential coverage. Amount: The amount of the credit depends on a family s income and other factors. More substantial help is available to people at lower income levels. Use: The APTC can be used to purchase any metal-level plan. Cost-Sharing Reductions Financial assistance that reduces out-of-pocket costs (co-pays and deductibles) after consumer pays the premium and enrolls in plan. Eligibility: Available for consumers with incomes % FPL Amount: The amount of reduction depends on income. More substantial help is available to people at lower income levels. Use: Families can enroll in high value silver plans that already reflect the reduction. 7

8 How is the Tax Credit Calculated? The APTC reflects how much families are expected to contribute to their premiums. APTC are set at a level that is meant to allow families to purchase a relatively inexpensive silver plan. Steps to Calculate the APTC STEP 1 STEP 2 STEP 3 Determine the amount the family is expected to spend on premiums (expected contribution) given the family s income Identify the cost of the second-lowest cost silver plan (benchmark plan) for this family and adjust the cost to reflect selected characteristics of the family, such as age and size. Fill the gap after identifying a family s expected contribution, determine how much more is needed to purchase the benchmark plan. The APTC are set at this dollar amount to fill this gap 8

10 How is the Tax Credit Used to Shop for Plans? After the Marketplace determines an individual s eligibility for APTC/CSR, the individual will be told the maximum amount of APTC she can receive. The individual can then shop around for different plans. If he or she chooses a less expensive plan, the APTC will cover more of the premium costs. If he or she chooses a more expensive plan, the APTC will cover less of the premium costs, and the individual will need to pay more out of pocket. As an individual shops, they may want to consider both premium costs and out-of-pocket costs under various plans. MARKETPLACE DETERMINES ELIGIBILITY FOR FINANCIAL ASSISTANCE CHOOSES A HEALTH PLAN MAX APTC 10

11 How Does the Cost Sharing Reduction Work? People who qualify for reductions can enroll in special silver plans that have a higher actuarial value, meaning co-payments and deductibles in these plans are reduced. Only available to those who enroll in a Silver plan. There are three levels of savings available to people who qualify for a CSR. The level of savings (or tier) for which a family qualifies is based on the family s income. Issuers provide silver plans with higher actuarial value for those with CSRs. The maximum out-of-pocket costs for someone above 250% FPL is. For those under 250% FPL, the CSR reduces the maximum out-of-pocket costs. The higher the actuarial value, the lower the deductibles, coinsurance, and/or copayments TIERS OF COST-SHARING REDUCTIONS CSR Tier Income Range 1 Special populations < 100% FPL; 100% FPL 150 %FPL Actuarial Value of the Silver Plan 94% $2, % FPL - 200% FPL 87% $2, % FPL 250% FPL 73% $5,200 Silver plan variations offered in these levels 2014 Maximum Out of Pocket Costs* 11 *78 FR 15483

20 Key Takeaways on Financial Considerations Calculating the cost of health plans is complicated, particularly where tax credits and reductions must be factored in. One size does not fit all: empower consumers to make the best personal choice for themselves. While in general there is a trade-off between premiums and (higher premiums for lower and lower premiums for higher cost sharing), this is not always true when tax credits are available. Out of pocket expenses are a key factor for individuals with high medical expenses. These individuals should consider plans with high actuarial value (low deductibles and ). After accounting for tax credits, bronze plans may be less expensive than catastrophic plans for many people under 200% FPL. 20

21 Access Considerations Drug Formularies Provider Networks Utilization Controls The medications covered by the health plan. QHPs must provide greater of: One drug per USP (United States Pharmacopeia) category and class, or Same number of drugs per category and class as a specific benchmark plan Consumer will want to verify that drugs they take are on plan formulary Enrollees may request clinically appropriate drugs not on formulary Some higher cost drugs may have higher co-payments Co-payments on certain high cost drugs may not count towards deductible The providers (such as doctors or hospitals) whose services are covered by the plan. Consumers may wish to verify whether certain providers are included in the plan s network when comparing plans Mechanisms that health plans use to limit the use of services; for example, prior-authorization or visit limits. Individuals who use high amounts of medical services or high-cost services may wish to verify which utilization controls will apply when comparing plans. Utilization controls on drugs may include: Tiering (higher for higher cost drugs) Prior authorization Quantity & frequency limits Step therapy (require enrollees to try lower cost drugs before higher cost drugs) 21

22 Transparency of Formularies & Networks The Washington Health Benefit Exchange health plan finder includes an online provider search tool. Formulary information is not available through the Washington Health Benefit Exchange. Consumers must analyze plan formularies through the issuer instead of the Marketplace. 22

23 Key Takeaways on Access Considerations Enrollees with substantial medical needs, or who want access to specific providers and prescriptions may need to research provider networks, formularies and utilization control mechanisms. Information on provider networks is available through the online health plan finder, but information on formularies is not easily accessible. Information on utilization controls may be even more difficult to find. In Washington, consumers will need to obtain information on formularies and utilization controls from the issuer. 23

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